Climate Finance: ESG funds invest $400 billion in Big Oil

Under accusation 25 patrimonial managers that participate to the initiative Net Zero Asset Managers

Despite commitments to meet the 1.5 degree threshold of global warming, they still invest more than $400 billion in oil and gas. Deceiving their customers. This is the accusation made by the financial think tank Carbon Tracker to some of the world’s largest asset managers. In particular, there are 25 asset managers placed on the index due to distortions in climate finance. All are part of the Net Zero Asset Managers (NZAM) initiative.

Polluting the climate finance

Commitments for climate finance that have little correspondence with the real investments that are made. And instead of divesting, you go in the opposite direction. Some of the biggest players like the US blackrock, Capital Group and Fidelity, which offer funds to investors around the world, as well as the French Amundi, have “doubled interest in oil and gas” in 2022. And they significantly increased their total holdings in the 15 oil & gas companies analyzed by Carbon Tracker, including ExxonMobil, Chevron and TotalEnergies. The shares of these energy companies today constitute 6.1% of the portfolio managed by Amundi, 2.3% of State Street, 1.3% of Blackrock.

But often these participations are not in the open. With the increased demand for financial products compatible with Paris, asset managers have begun to label their portfolios even inappropriately as “green”. According to the Carbon Tracker report, over 160 funds analyzed have sustainability credentials and climate awareness, but overall manage 4.5 billion dollars of investment in the 15 oil & gas companies, whose policies are not aligned with Paris.

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To take just one example with Blackrock, the largest fund among those considered in the report: the shares of the 15 energy companies make up 35% of the investments of a fund labeled “ESG“, iShares V Plc – MSCI World Energy Sector ESG UCITS ETF.

“Growing numbers of investors want to support this transition, and are seeking to align their portfolios with 1.5°C – says Mike Coffin, co-author of the report – However, it’s hard to see how they can do this with credibility if they own financial interests in oil and gas companies that are not themselves aligned with the Paris target.”

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